Question 1

Which of the following utility functions is an example of preferences for perfect substitutes?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 2

Marginal utility

Accepted Answer

A)  is the ratio of total utility to total consumption. 
B)  is the rate at which total utility changes as the level of consumption rises. 
C)  will always be equal to the product's price. 
D)  tells us nothing; we're only concerned with total utility. 
A)  is the ratio of total utility to total consumption. 
B)  is the rate at which total utility changes as the level of consumption rises. 
C)  will always be equal to the product's price. 
D)  tells us nothing; we're only concerned with total utility.

Question 3

Which of the following utility functions is an example of preferences for perfect complements?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 4

Identify the truthfulness of the following statements. I.Diminishing marginal utility and increasing total utility are incompatible with each other.
II.When marginal utility is negative,total utility is decreasing.

Accepted Answer

A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  I is false; II is true. 
A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  I is false; II is true.

Question 5

Indifference curves that intersect are said to be:

Accepted Answer

A)  Irrational. 
B)  Non-transitive. 
C)  Inconsistent with our basic assumptions about preferences. 
D)  Complete, but not consistent. 
A)  Irrational. 
B)  Non-transitive. 
C)  Inconsistent with our basic assumptions about preferences. 
D)  Complete, but not consistent.

Question 6

Wendy is very indecisive.She can't decide whether she should go on a cruise or spend her vacation at her friend's home.Her preferences violate the assumption of:

Accepted Answer

A)  Completeness. 
B)  Transitivity. 
C)  More is better. 
D)  Both completeness and transitivity. 
A)  Completeness. 
B)  Transitivity. 
C)  More is better. 
D)  Both completeness and transitivity.

Question 7

Imagine an indifference curve graph with units of clothing on the y-axis and visits to the neighborhood pizza joint for dinner on the x-axis.If the indifference curves for this individual are negatively sloped but close to horizontal,it means

Accepted Answer

A)  the marginal utility from another pizza dinner is high relative to the marginal utility of clothing. 
B)  the marginal utility from another pizza dinner is low relative to the marginal utility of clothing 
C)  this person doesn't like pizza at all. 
D)  this person can spend a lot of money on clothes at times. 
A)  the marginal utility from another pizza dinner is high relative to the marginal utility of clothing. 
B)  the marginal utility from another pizza dinner is low relative to the marginal utility of clothing 
C)  this person doesn't like pizza at all. 
D)  this person can spend a lot of money on clothes at times.

Question 8

Consider the utility function U = 5x +3y2,which has MUx = 5 and MUy = 6y.The indifference curves for this utility function

Accepted Answer

A)  will be straight lines. 
B)  will have the same   as   increases holding   constant. 
C)  will have the same   as   increases holding   constant. 
D)  will have a diminishing marginal rate of substitution as the consumer substitutes   for   . 
A)  will be straight lines. 
B)  will have the same   as   increases holding   constant. 
C)  will have the same   as   increases holding   constant. 
D)  will have a diminishing marginal rate of substitution as the consumer substitutes   for   .

Question 9

Suppose that MRSS1U1B1x,y S1U1B0= 10.

Accepted Answer

A)  The consumer is willing to substitute 10 units of   for 1 unit of   to leave utility unchanged. 
B)  The consumer is willing to substitute 10 units of   for 1 unit of   to leave utility unchanged. 
C)  Regardless of prices, the consumer will consume only   . 
D)  Regardless of prices, the consumer will consume only   . 
A)  The consumer is willing to substitute 10 units of   for 1 unit of   to leave utility unchanged. 
B)  The consumer is willing to substitute 10 units of   for 1 unit of   to leave utility unchanged. 
C)  Regardless of prices, the consumer will consume only   . 
D)  Regardless of prices, the consumer will consume only   .

Question 10

Which of the following statements is false?

Accepted Answer

A)  Total utility and marginal utility cannot be plotted on the same graph 
B)  The marginal utility is the slope of the (total) utility function 
C)  Marginal utility is not the slope of total utility 
D)  The relationship between total and marginal functions holds for other measures in economics 
A)  Total utility and marginal utility cannot be plotted on the same graph 
B)  The marginal utility is the slope of the (total) utility function 
C)  Marginal utility is not the slope of total utility 
D)  The relationship between total and marginal functions holds for other measures in economics

Question 11

If MRSx,y? is constant at 5,then which of the following is false?

Accepted Answer

A)  The slope of the indifference curve is positive. 
B)  The goods are perfect substitutes. 
C)  The indifference curves are linear. 
D)  The slope of the indifference curve is negative. 
A)  The slope of the indifference curve is positive. 
B)  The goods are perfect substitutes. 
C)  The indifference curves are linear. 
D)  The slope of the indifference curve is negative.

Question 12

A _____________________ measures the level of satisfaction that a consumer receives from any basket of goods.

Accepted Answer

A)  production function. 
B)  transformation function. 
C)  utility function. 
D)  transitivity function. 
A)  production function. 
B)  transformation function. 
C)  utility function. 
D)  transitivity function.

Question 13

Suppose for a utility function that the marginal utility for good   is given by MUx = 5y2/x

Accepted Answer

A)  The more is better assumption is not satisfied for   in this utility function. 
B)  The more is better assumption is satisfied for   in this utility function. 
C)  This shows a positive and increasing marginal utility of x. 
D)  The marginal rate of substitution must be diminishing. 
A)  The more is better assumption is not satisfied for   in this utility function. 
B)  The more is better assumption is satisfied for   in this utility function. 
C)  This shows a positive and increasing marginal utility of x. 
D)  The marginal rate of substitution must be diminishing.

Question 14

Consider the utility function U = min (5x,7y).To increase satisfaction the consumer must consume

Accepted Answer

A)  at least 5 units more of   
B)  at least 7 units more of y 
C)  more of both x and y 
D)  more of either x or y 
A)  at least 5 units more of   
B)  at least 7 units more of y 
C)  more of both x and y 
D)  more of either x or y

Question 15

Suppose for some utility function that MUx = 5y and MUy = 7x

Accepted Answer

A)  The assumption that more is better is satisfied for both goods. 
B)  This utility function will violate the assumption that preferences are complete. 
C)  The indifference curves for this utility function will be straight lines with a slope of -1. 
D)  The indifference curves will have a diminishing marginal rate of substitution. 
A)  The assumption that more is better is satisfied for both goods. 
B)  This utility function will violate the assumption that preferences are complete. 
C)  The indifference curves for this utility function will be straight lines with a slope of -1. 
D)  The indifference curves will have a diminishing marginal rate of substitution.

Question 16

Marginal utility is

Accepted Answer

A)  the slope of the total utility function. 
B)  the slope of a ray from the origin to the total utility function. 
C)  always less than average utility. 
D)  always greater than average utility. 
A)  the slope of the total utility function. 
B)  the slope of a ray from the origin to the total utility function. 
C)  always less than average utility. 
D)  always greater than average utility.

Question 17

If one were to draw indifference curves representing preferences over two varieties of red apple,it is likely that one would draw them as:

Accepted Answer

A)  almost straight lines. 
B)  almost "L-shaped." 
C)  positively sloped. 
D)  crossing. 
A)  almost straight lines. 
B)  almost "L-shaped." 
C)  positively sloped. 
D)  crossing.

Question 18

Identify the truthfulness of the following statements. I.Ordinal utility gives us information about which basket the consumer prefers and quantitative information about the intensity of the preference.
II.Cardinal utility gives us information about which basket the consumer prefers but not about the intensity of those preferences.

Accepted Answer

A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  I is false; II is true. 
A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  I is false; II is true.

Question 19

Consider the utility function U = min (5x,7y).The indifference curves for this utility function will be

Accepted Answer

A)  vertical 
B)  horizontal 
C)  upward sloping 
D)  L-shaped 
A)  vertical 
B)  horizontal 
C)  upward sloping 
D)  L-shaped

Question 20

Consider the following three market baskets.   If Basket A and Basket B are on the same indifference curve,preferences satisfy the usual assumptions,and the indifference curves have a diminishing marginal rate of substitution,

Accepted Answer

A)  Basket C is preferred to Basket A 
B)  Basket A is preferred to Basket C 
C)  The consumer is indifferent between Basket A and Basket C 
D)  There is not enough information to determine how the consumer would rank Basket A relative to Basket C. 
A)  Basket C is preferred to Basket A 
B)  Basket A is preferred to Basket C 
C)  The consumer is indifferent between Basket A and Basket C 
D)  There is not enough information to determine how the consumer would rank Basket A relative to Basket C.

Which of the following utility functions is an example of preferences for perfect substitutes?

Marginal utility

Which of the following utility functions is an example of preferences for perfect complements?

Identify the truthfulness of the following statements. I.Diminishing marginal utility and increasing total utility are incompatible with each other. II.When marginal utility is negative,total utility is decreasing.

Indifference curves that intersect are said to be:

Wendy is very indecisive.She can't decide whether she should go on a cruise or spend her vacation at her friend's home.Her preferences violate the assumption of:

Imagine an indifference curve graph with units of clothing on the y-axis and visits to the neighborhood pizza joint for dinner on the x-axis.If the indifference curves for this individual are negatively sloped but close to horizontal,it means

Consider the utility function U = 5x +3y²,which has MU_x = 5 and MU_y = 6y.The indifference curves for this utility function

Suppose that MRS_x,y= 10.

Which of the following statements is false?

If MRS_x,y?is constant at 5,then which of the following is false?

A _____________________ measures the level of satisfaction that a consumer receives from any basket of goods.

Suppose for a utility function that the marginal utility for good is given by MU_x = 5y²/x

Consider the utility function U = min (5x,7y).To increase satisfaction the consumer must consume

Suppose for some utility function that MU_x = 5y and MU_y = 7x

Marginal utility is

If one were to draw indifference curves representing preferences over two varieties of red apple,it is likely that one would draw them as:

Consider the utility function U = min (5x,7y).The indifference curves for this utility function will be

Consider the following three market baskets. If Basket A and Basket B are on the same indifference curve,preferences satisfy the usual assumptions,and the indifference curves have a diminishing marginal rate of substitution,

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Exam 3: Consumer Preferences and the Concept of Utility

Which of the following utility functions is an example of preferences for perfect substitutes?

Marginal utility

Which of the following utility functions is an example of preferences for perfect complements?

Identify the truthfulness of the following statements. I.Diminishing marginal utility and increasing total utility are incompatible with each other. II.When marginal utility is negative,total utility is decreasing.

Indifference curves that intersect are said to be:

Wendy is very indecisive.She can't decide whether she should go on a cruise or spend her vacation at her friend's home.Her preferences violate the assumption of:

Imagine an indifference curve graph with units of clothing on the y-axis and visits to the neighborhood pizza joint for dinner on the x-axis.If the indifference curves for this individual are negatively sloped but close to horizontal,it means

Consider the utility function U = 5x +3y2,which has MUx = 5 and MUy = 6y.The indifference curves for this utility function

Suppose that MRSx,y = 10.

Which of the following statements is false?

If MRSx,y? is constant at 5,then which of the following is false?

A _____________________ measures the level of satisfaction that a consumer receives from any basket of goods.

Suppose for a utility function that the marginal utility for good is given by MUx = 5y2/x

Consider the utility function U = min (5x,7y).To increase satisfaction the consumer must consume

Suppose for some utility function that MUx = 5y and MUy = 7x

Marginal utility is

If one were to draw indifference curves representing preferences over two varieties of red apple,it is likely that one would draw them as:

Consider the utility function U = min (5x,7y).The indifference curves for this utility function will be

Consider the following three market baskets. If Basket A and Basket B are on the same indifference curve,preferences satisfy the usual assumptions,and the indifference curves have a diminishing marginal rate of substitution,

Analyzing Economic Problems

Demand and Supply Analysis

Consumer Choice

The Theory of Demand

Inputs and Production Functions

Costs and Cost Minimization

Cost Curves

Perfectly Competitive Markets

Competitive Markets

Monopoly and Monopsony

Capturing Surplus

Market Structure and Competition

Game Theory and Strategic Behavior

Risk and Information

General Equilibrium Theory

Externalities and Public Goods

Filters

Consider the utility function U = 5x +3y²,which has MU_x = 5 and MU_y = 6y.The indifference curves for this utility function

Suppose that MRS_x,y= 10.

If MRS_x,y?is constant at 5,then which of the following is false?

Suppose for a utility function that the marginal utility for good is given by MU_x = 5y²/x

Suppose for some utility function that MU_x = 5y and MU_y = 7x